Considering everything going on lately, it's been pretty quiet here! So many topics to choose from, but what's on my mind today is the future of the economy. From what I've been reading, it seems anything is possible--inflation, deflation, recovery, into the abyss--you name it, some economist is predicting it.

The Dow is staging a recovery, but is this really a sign that times are getting better, or just that Wall Street used the bailout money to reward themselves, leaving the rest of the US up the creek (you know the one I mean) amid rising unemployment and foreclosures?

Then there was the Robert Fiske article "The Demise of the Dollar" claiming there is a movement among certain countries to stop valuing oil in dollars. http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html It caused a ruckus on Wall Street, and though the Wall Street Journal said no way it's true, I have no idea whether or not to believe them. They (and Time) claim that even if it is true, it's not that big a deal. I don't know--do you? Anyone out there have a clue to share?

So many opinions, so many conspiracy theories, so many economists who can take the same facts and make them dance to any beat. . . what's an ordinary person to believe? What do you think is going on?

I've read several articles dealing with the efforts of China, and I believe Russia, to replace the dollar as the international currency. Some suspect their purpose is more political than economic. Since I've read that China owns more US bonds than anybody, in my thinking, their accomplishing what they want seems foolish, even though most commentators also insist that a change to an artificial currency, something like the Euro, I suspect, would not necessarily be bad for the dollar. As far as I know and read, the US still has the most powerful and biggest economy on the globe and sheer size probably has enough clout to keep the dollar close to the top.

If the stock market is any indicator, it does appear that the economy is at least rallying. And consumer spending increased, which some say is one of the best signs, although I did hear one commentator who said it's far more important that the CEO's have confidence in the economy than consumers, pointing out that until more consumers are back at work, increased consumer spending won't have the effect it should.

"The Demise of the Dollar" article sure made some waves, didn't it? I half expect a classic Friday late afternoon press release that yes, everything we read about it is true and wait, there's more.

Anyways, this is essentially what both the U.N. and China have proposed earlier this year, that let's ditch the dollar, isn't it?

The Russian Prime Minister was asked about the currency issue last week in China, and he said that bilateral Sino-Russian energy yuan/rouble trade is under consideration and that, quote, "our energy experts, including even those from Gazprom, raised this issue as well."

Seems like a done deal then, what with the energy lobby behind it.

Of the big oil producers, I understand that Venezuela and Iran already trade in euros while Norway, I believe, is heading that way (although the Norwegian krone is quite a might of its own ). Earlier this year, euro surpassed dollar as Russian's #1 reserve currency, so who knows, especially as Moscow seems to have changed her mind about selling the High North energy (Stokhman etc.) to the United States of America in favor of euro-Europe sales. Then again, given the symbiotic relationship between the People's Republic of China and the United States of America, I don't quite see the Chinese rocking their profitable boat as long as the old adage stands that money is power.

Cora wrote:

The Euro is not an artificial currency. It's an actual currency used by several hundred million people in twelve European countries with more to come in the next few years.

Point taken. Perhaps "created" or "constructed," would have been better than "artificial." On the other hand, isn't that what the essential meaning of artificial is--something created from other things, something to which creative endeavor has been applied? All currencies, when it comes right down to it, are artificial, for they represent value rather than having any inherently--unlike gold, for example. From what I've read, that's what China proposed--creating a new currency--a new representation of wealth--to replace the dollar in international trading. I'm surprised, in a way, that none of those who wish a change, haven't suggested returning to the gold standard. Of course, that might not change anything, if the US still has the largest gold reserve.

If my government went belly-up tomorrow, the goods of the barter trade would prove to be more real than the notes and coins in my billfold or the numbers in my bank account._________________"To be in a romance is to be in uncongenial surroundings. To be born into this earth is to be born into uncongenial surroundings, hence to be born into a romance." (G.K. Chesterton)

You know, like how you got very drunk with excellent champagne on the New Year's Eve of 2002 (possibly a gorgeous lady was involved), slept through the day of January 1st, woke up on January 2nd, and missed the news how the eurozone switched from the essentially "artificial" banking-euro to cash-euro overnight.

IMO, the all important US Dollar will not go to a decline. All these talks about other currencies replacing the Dollor were just talks. As long as US is still the top consumer nation in this world, the Dollar will rule. The Russian and Chinese are both showing off their muscles. Both the Chinese Yuen and Russian Rouble are not internationally recongized i.e. not a converable curriencies, hence their reliance of US Dollar, the plan to "float" their own currencies in the international market have been long time coming and are closer than ever, hence all these noises to undermine the US Dollar. In the UK, we are more worry about the "Demise of the Sterling Pound"!_________________Life is short. Eat dessert first.

I wish, karaa, but I can't drink champagne because I'm allergic to sulfites. Nah! If I missed something like the change to euros from francs, marks, etc, it was simple inattention or the faultiness of an aging memory.

IMO, the all important US Dollar will not go to a decline. All these talks about other currencies replacing the Dollor were just talks. As long as US is still the top consumer nation in this world, the Dollar will rule. The Russian and Chinese are both showing off their muscles. Both the Chinese Yuen and Russian Rouble are not internationally recongized i.e. not a converable curriencies, hence their reliance of US Dollar, the plan to "float" their own currencies in the international market have been long time coming and are closer than ever, hence all these noises to undermine the US Dollar. In the UK, we are more worry about the "Demise of the Sterling Pound"!

Just a small correction, if you don't mind: the Russian Rouble has been convertible and tradable since 2006.

In other news, the Latin American ALBA-countries just said "yes" to own regional currency "sucre" (Sistema Unificado de Compensación Regional).

Hi Karaa, Thanks for the information. I didn't know Russian Rouble are now convertible. Having worked in Moscow & Kiev in the late 90s and Russia Rouble was not the trading currency, the US Dollor was. Guess I have to brush up my knowlege. _________________Life is short. Eat dessert first.

Hi Karaa, Thanks for the information. I didn't know Russian Rouble are now convertible. Having worked in Moscow & Kiev in the late 90s and Russia Rouble was not the trading currency, the US Dollor was. Guess I have to brush up my knowlege.

I think the world is slowly coming to realize that the 21st Century Russia is no longer the Russia of the 1990s, now is it? Whether it was President Reagan who drove the final nail into the Soviet coffin is debatable. However, the successor, the New Russia, seems to have & hold a good hand. I'm not sure if it's *quite* what the late US president imagined. Today, the New Russia is the world's largest energy supplier, both in gas and oil, and ranks third in its foreign & gold reserves, right after #1 China and #2 Japan. That's pretty much holding a full hand of top cards.

In gold reserves at least, China and Russian are well down the list--7th and 12th. The top two are the central bank for the EU--#1--and the US--#2.

My bad. I should have been more specific: international reserves, foreign + gold (not "&").

Can I be a nitpicker (again!) and point out that it is not the European Central Bank that holds the world's largest official gold reserves, it's the Eurozone, i.e. the member state's central banks combined. That's kind of like "cheating," as Germany, France, and Italy individually rank right behind the Eurozone and the US in gold reserves.